Kenya outruns rest of East Africa

Kenya outruns rest of East Africa

In 2012 Fina Bank sold out to Nigeria’s Guaranty Trust Bank and the National Bank of Commerce suffered the same fate as Global Trust Bank when it was liquidated.

This was not the only low point of the Ugandan banking sector. Unlike Kenya and Tanzania, Uganda is still being seen as not doing enough to combat proceeds that aid terrorism and money laundering and is yet to be removed from FATF’s monitoring list. The other low point that has stalled the progress of Ugandan banks is low interest rates.

By June 2014 UShs 9 trillion ($3.5bn) had been disbursed as credit by the combined 25 Ugandan banks. In 2012 the total assets stood at $5.9bn which rose to $6.6bn in 2013. Loans however, took a dip from the 11.6% high of 2012 to 6.5% in 2013.

Kenya: Innovation and profits galore
Between 2004 and 2014 Kenyan banks have been synonymous with handsome profits. This trend is showing no sign of abating in this East African nation a decade since it started. Interestingly, local banks, Kenya Commercial Bank (KCB) and Equity Bank have upstaged multinational lenders, Standard Chartered and Barclays Banks as the top-performing financial institutions.

The Kenyan banking sector is bubbling with creativity, the desire to try new products and taking competition to a new level. The Commercial Bank of Africa’s (CBA) 2012 rollout of the M-Shwari product, which is a mobile-based banking platform that allows customers to deposit and borrow, has seen the bank’s profitability increase and has moved it into the first tier league of banks. So far CBA has disbursed $87.7m as loans and seen its deposits bulge to $269.9m.

Equity Bank’s 2010 launch of M-Kesho redefined the banking sector and is attributed as the major catalyst that has not only opened the banking space and simplified banking to the unbanked but boosted Equity’s fortunes.

Other than huge profits, the banking sector has been identified with three other success points. These include unrelenting cross-border expansion tendencies, bold uptake of modern technology and constant recruitment of high performing individuals into their management boards.

Six indigenous Kenyan banks, Kenya Commercial Bank (KCB), Equity Bank, Diamond Trust Bank (DTB), Cooperative Bank, I&M Bank and CBA have subsidiaries in all the EAC countries of Uganda, Tanzania, Rwanda, Burundi and South Sudan and are nursing ambitions for growth outside EAC into the Southern African Development Cooperation (SADC) bloc.

According to the Kenya Bank Supervision Annual Report 2013 released this year, the sector recorded a 15.9% growth in total net assets. In December 2012 the total assets stood at Kshs 2.33 trillion ($26.2bn). This figure rose to $30.45bn in 2013. The report prepared by the Central Bank of Kenya (CBK) also goes to say that 32.7% of Kenya’s adult population has access to formal “prudentially regulated financial institutions” and 66.7% have access to formal financial providers.

By December 2013, pre-tax profit stood at $1.4bn. In the eight months of 2014 all indications were clear that the Kenyan lenders were set to break their record yet again as the profits before tax by August amounted to $1.03bn.


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Written by Wanjohi Kabukuru

Wanjohi is an award-winning international editor and journalist, with a specialty in business, geo-politics and environment. He has worked extensively in the multi-cultural environments of more than 10 countries in East, Central and Horn of Africa together with the Indian Ocean nations and is a board member of several international media organisations. Over the last 19 years his articles have been published in publications such as New African, African Business, African Banker, Radio France International (RFI), Inter Press Service (IPS), Diplomat East Africa, BBC Focus on Africa, Mail & Guardian, Africa Renewal and 100Reporters among other numerous publications.

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